AUD/USD pulls away from daily lows on greenback weakness

Although it failed to build on yesterday's gains on Tuesday, the AUD/USD pair was able to pull away from daily lows during the first half of the NA session as the US Dollar Index dropped to its lowest level since Trump's election victory. Having set a daily low at 0.7520, the AUD/USD is now trading at 0.7540, still down 0.44% on the day.

Mixed macro data from the U.S. seem to have triggered a USD sell-off, pushing the US Dollar Index to its lowest level since November 11, at 98.65. At the moment, the DXY is at 98.72, losing 0.2%. In the meantime, boosted by the positive risk sentiment, the 10-year U.S. T-bond yield rose above 2.3%, helping the index find support for the time being.

The CPI data for the Q1 from Australia will be watched closely in the Asian session. The CPI is expected to rise 2.2% on a yearly basis and a reading below consensus could trigger another AUD sell-off as it would allow the RBA to hold on to its loose monetary policy. On the other hand, if the inflation rises at a faster pace than expected, the AUD could gain strength on refueled speculations of the RBA going for a rate hike in near-term.

• Australia's Q1 2017 CPI preview - NAB 
• RBA: Next move largely depends on the outlook for wages - HSBC

Technical outlook

Yesterday's high at 0.7585 could be seen as the first technical resistance for the pair ahead of  0.7610 (Apr. 17 high) and 0.7640 (Apr. 2 high). To the downside, the supports are located at 0.7500 (psychological level), 0.7470 (Apr. 12 low) and 0.7400 (psychological level).